Audit Commission discovers £1bn in public sector fraud

Initiative compares data held by 1,300 public sector and 77 private sector organisations

The Audit Commission's National Fraud Initiative (NFI) is said to have pinpointed £1 billion potentially lost to fraud, overpayments or errors across council and government departments.

The £1 billion includes 15,000 cases of pension overpayments worth £450 million, almost 100,000 cases of council tax single person discounts incorrectly awarded worth £160 million, and over £250 million of housing benefit overpayments.

Chairman of the Audit Commission, Jeremy Newman, said: "The vigilance of organisations from local councils to central government departments, supplying essential data and investigating potential frauds flagged up by the initiative, has paid off to the tune of £1 billion."

The initiative compares data held by 1,300 public sector and 77 private sector organisations. These include sister audit bodies in Scotland, Wales and Northern Ireland, government departments and other national agencies. It flags up inconsistencies in data that potentially indicate when fraud is taking place, and signals the need for a closer investigation.

The NFI has introduced real-time and flexible matching alongside the traditional two-yearly national matching NFI exercise.

Amanda Gardiner, public sector specialist at analytics software firm SAS, said: "Fraud and error comes in all shapes and sizes, with new types continuously evolving. For this reason the government must be prepared for a long and protracted campaign to unearth instances of fraud and error.

"Training of course will be key and the government has made some definite progress in this field over the last 12 months. There must also be a holistic, flexible approach that not only detects the fraud already understood by the public sector, but also prevents the fraud it does not expect."

SAS recently questioned 800 civil servants about training in combating fraud and overpayment errors. The survey found that 26% had received training in the last 12 months, compared with 18% in 2011.

In addition, 19% said they had received training in the last six months, compared with just 9% in 2011.